Not upheld: Investment mis-selling complaint against Prudential Pensions Limited

Decision detail

Summary

Mr C complained that Prudential sold him a second Retirement Annuity Contract (RAC) in 1987 without his knowledge when he sought to increase contributions to his original 1981 RAC policy. The second RAC had different investment characteristics (cash accumulation with terminal bonus) compared to the first (guaranteed minimum pension with annual bonuses). Mr C claimed he would have been £20,000 better off had the additional contributions been invested in the first policy. The ombudsman found the complaint not upheld, noting that Mr C received annual statements for both policies, the two policies had anticipated broadly equal long-term returns, no evidence supported the £20,000 loss claim, and the separate policies actually provided Mr C with flexibility to defer the second RAC beyond its retirement date while crystallizing the first.

The Ombudsman's reasoning

The ombudsman found that although the sale occurred in 1987 before strict record-keeping requirements came into force in 1988, Mr C should have been aware of the second policy from annual statements sent to his address. The two policies, while invested in the same with-profits fund, had different structures: the first guaranteed a minimum pension benefit, while the second was a cash accumulation contract. The ombudsman noted that long-term returns on both plans would have been anticipated to be broadly equal but not guaranteed. Critically, Mr C provided no evidence to support his claim of a £20,000 loss. The ombudsman also observed that having two separate policies actually provided Mr C with flexibility, as evidenced by his ability to take benefits from the first RAC on its retirement date while deferring the second RAC.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website